Credit Advice

I think paying the whole balance in installments is better because it looks better on your credit that your paying the monthly balance on time...however i'm in that situation too and i did the opposite I settled it for the minimum lump sum to close it out just so it's one less thing I have to pay for. I should have kept paying the monthly but I didnt

Paying the settlement is worse for your short-term score, but better for your long-term score.

The account is a problem account as long as it is there. It is listed in collections, and as such, is derogatory. As it is an active derogatory, the clock has not started ticking for when it can fall off the report.

By making payments, and if the creditor reports them (may not have to for an account in collections, only may be required to adjust outstanding balance), it helps your score.

But, the fact that it is a derogatory account that is still opened hurts more than the positive on the payments.

If you settle, you take a ding for it being settled now; however, the clock now starts for it becoming old data and to fall off the report completely in 7 years. And, as time progresses, even with it on your report, because it is closed and no longer being reported on, it has less and less impact on your score, and your score will improve faster over time than making payments.

I was in the same situation. I decided to settle--it's better than letting the credit remain unpaid. One year later I was finally able to begin rebuilding my credit (more responsibly, of course), and one year after that my credit score is 769. It can be done--good luck to you.

Check it out... this Q&A was posted on Credit Karma's blog post - http://blog.creditkarma.com/credit-scores/top-credit-questions-dealing-with-difficult-debt/.

Cool!